Nowadays, the shipbuilding industry faces a volatile market because global shipyard capacity exceeds demand. The shipyard's management carried out various strategies and approaches to improve operational performance amid fluctuating markets, but many shipyards still have difficulties improving the shipyard performance. Meanwhile, agile manufacturing (AM) is one of the solutions to unpredictable problems, dynamic demand, and products with a high level of customization, which has been widely implemented in the manufacturing industry. Therefore, the present study aims to investigate the linkage between fluctuating demand, customer focus, and shipyard performance from the perspective of AM practices. This study used a quantitative PLS-SEM method and cluster random sampling technique. The research data were collected through a questionnaire survey of 155 respondents from 27 shipyards in Indonesia. The results revealed that fluctuating demand positively influences customer focus, and customer focus positively and significantly impacts shipyard performance in AM practices. This study is one of the few empirical studies on AM practices in the shipbuilding industry. Besides, this study provides insight for shipyard practitioners to consider implementing the AM strategy by enhancing customer focus to increase operational performance amid fluctuating markets.